"BULLSHIT!" said Malcolm Turnbull, in reference to Tony Abbott's claim that keeping down our pollution output will NOT cost a king's ransom.

It remains to be seen if any of these dopey palooka's will have the sense to switch Australia's electricity needs over to nuclear power reactors.

I started reading Peter Singer's "One World" this weekend and his opening chapter describes carbon trading. I'm actually starting to come around to an ETS more. Before I was thinking on a national level of "how can Australia pollute less" but he looks at the problem at the international level of "how can the world pollute less". And a world-wide ETS will do that better than each nation setting up its own set of taxes. Here's how a global ETS would work:

First you set a global standard of how many tons of emissions per capita is allowed per country: let's say we set it at 5 tons per capita. Obviously developed countries like the US emit a lot more (currently around 19) and developing countries like India a lot less (currenly around 1). But of course it's not fair to expect America to drop to 5 tons tomorrow, its economy simply wouldn't recover. So you set up a trading scheme. Each year that India stays at 1 ton per capita, they have an extra 4 tons of carbon permits they can sell to countries like America, so that America can continue to emit their 10 tons per year. This gives each country an incentive and a choice to make. America's government can continue to pay for those credits at a cost to its economy, or it can set up internal policies to reduce its pollution so it doesn't have to buy as many credits next year. India can continue to develop using "dirty" energy, knowing that eventually it won't be able to sell carbon credits anymore; or it can use some of the money it gets from selling its credits to keep its emissions low, so it can keep selling its credits every year. Developed countries have an incentive to cut back their pollution, developing countries have an incentive to stop their emissions from growing.

T4E you mention wanting a market-based system. And ETS is a market-based system, by definition - it's setting up a market for buying and selling carbon. A carbon tax, on the other hand, isn't really a market based system, it just makes one good more expensive.

But I also get when people say a tax is easier for people to understand. I'm having a helluva time getting my head around how ETS's work.

I'm having an even tougher time buying into any One World "solution."

The problem is that it presupposes:

(1) that global warming is manmade, and that a reduction of carbon emissions would reverse the problem ...

and that even if (1) is true, that (2) some unelected body of transnational bureaucrats has the expertise and the objectivity to impose fair rules on everybody.

Point (2) is rather difficult to believe when you read that Rajendra Pachauri, the head of the IPCC, wants to impose ridiculously high taxes on airfare, restrict the use of private vehicles, and ban ice water in restaurants.

In short, why should Pachauri have any right to tell me what car I can drive and whether my local restaurant should serve ice water? Hey, Pachauri, why don't you stop hatching schemes to revolutionize Western society and start actually justifying your position? Head over to East Anglia, where they've got about 160 years of shaky temperature data to sort out, and don't come back until you've actually accomplished something.

A good policy framework would include some regulation in areas where the market doesn’t work well, such as the energy-efficiency of buildings and appliances. It would include a modicum of subsidy, on research into technologies that are still a long way from being marketable, such as carbon capture and storage. But it would rely largely on by far the most efficient tool in the policymaker’s kit—a carbon price.

A carbon price sends business a price signal to invest in clean stuff not dirty stuff. It doesn’t involve micromanaging business, which regulations do. It doesn’t impose a burden on taxpayers, or require governments to pick winners, which subsidies do. It is, according to an American study, twice as efficient as any other policy.

Economists prefer carbon prices, especially those set by taxes rather than cap-and-trade systems, which are more vulnerable to capture by the polluters they are supposed to penalise. Sadly, though, the views of economists carry little weight. Governments and businesses both tend to like subsidies.

Europe has done best. Its cap-and-trade system has set a carbon price and cut emissions modestly in the sectors it covers. But it relies too heavily on subsidies for renewable energy, and too little on its carbon price. Economists reckon a carbon price of around $40 is needed. Europe’s is around €13. America does not yet have a national carbon price; and its corn-ethanol subsidy, combined with a tariff on cheaper, greener imports, takes the planet’s first prize for the world’s most counterproductive “green” policy. The subsidy-laden bill to establish a cap-and-trade system is a step in the right direction; but, since the carbon price it would set is likely to be around $12, rising to $20 by 2020, not a very large one.

Governments see subsidies as a convenient way of easing in emissions curbs which businesses would otherwise resist. That may be so in the short term. But in the long run they make cutting emissions harder. The notion that dangerous climate change can be averted for a mere 1% of global GDP depends on policy being efficient. If it isn’t, the costs will mount—and so will the chances that the effort will fail.

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Carbon pricing keeps government out of management decisions and allows managers to choose between different ways of cutting carbon. According to a paper by Carolyn Fischer, of Resources for the Future, and Richard Newell, head of America’s Energy Information Administration, a carbon price is around twice as efficient as a renewable portfolio standard (which requires power companies to generate a certain proportion of the power they sell from renewable sources) and about two-and-a-half times as efficient as a renewable-energy subsidy.

...

Basic R&D in new energy technologies—in carbon capture and storage, for instance, which would allow the continued use of coal to generate electricity—is too risky for most companies to undertake on their own, and offers enough social benefits to deserve government support. But the subsidies now on offer go far beyond that.

Governments are spending heavily on encouraging the switch to low-carbon technologies, especially wind and solar power. “These policies are not particularly efficient, but they have been quite effective,” says Guy Turner, director of carbon markets at New Energy Finance. Some 50% of new power capacity added in the EU in 2000-06 was renewable energy, compared with 29% in 1990-2000.

This sort of energy is expensive. The best indication of that is the carbon price that would be required to make investment in renewables worthwhile without subsidy. According to New Energy Finance, onshore wind energy needs a carbon price of $38, offshore of $136 and solar cells of $196. Europe’s target for generating 20% of its energy from renewable sources therefore looks pricey. According to Richard Green, director of the Institute for Energy Research and Policy at Birmingham University, the implied marginal cost of carbon would be €129 a tonne—which suggests that allocating such large resources to renewable-energy subsidies is, as Mr Green says, “seriously sub-optimal”.

The worst example of a wasteful subsidy is America’s support programme for home-grown corn ethanol, which is coupled with tariffs on cheaper sugar-cane ethanol from Brazil. The programme has raised global food prices (and thus increased malnutrition among the world’s poorest); lined the pockets of America’s farmers; given policies to cut carbon a bad name; and cut little, if any, carbon.

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The real solution to the entire problem is to prevent the third world masses from breeding like rabbits. Overpopulation is the underlying cause of all our environmental problems. But will any government be brave enough to take this issue on? Will population control be placed on the table at Copenhagen? no chance!

The Malthusians are right that the world’s population is still increasing and can do a lot more environmental damage before it peaks at just over 9 billion in 2050. That will certainly be the case if poor, fast-growing countries follow the economic trajectories of those in the rich world. The poorest Africans and Asians produce 0.1 tonnes of CO2 each a year, compared with 20 tonnes for each American. Growth is helping hundreds of millions to escape grinding poverty. But if the poor copy the pattern of wealth creation that made Europe and America rich, they will eat up as many resources as the Americans do, with grim consequences for the planet. What’s more, the parts of the world where populations are growing fastest are also those most vulnerable to climate change, and a rising population will exacerbate the consequences of global warming—water shortages, mass migration, declining food yields.

In principle, there are three ways of limiting human environmental impacts: through population policy, technology and governance. The first of those does not offer much scope. Population growth is already slowing almost as fast as it naturally could. Easier access to family planning, especially in Africa, could probably lower its expected peak from around 9 billion to perhaps 8.5 billion. Only Chinese-style coercion would bring it down much below that; and forcing poor people to have fewer children than they want because the rich consume too many of the world’s resources would be immoral.

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If you don't like governments telling you what to do T4E, you should be demanding an ETS, domestic or international. The only government involvement is setting up the system, after that it's free market forces. Even a carbon tax has minimal government involvement (in setting the price of carbon), after that, once again, it's up to the market to decide what to do with those costs.

And when these third world babies you are so fond of grow up and become the new carbon producers in the brave new word of emissons trading you long for?

"But if the poor copy the pattern of wealth creation that made Europe and America rich, they will eat up as many resources as the Americans do, with grim consequences for the planet. What’s more, the parts of the world where populations are growing fastest are also those most vulnerable to climate change, and a rising population will exacerbate the consequences of global warming—water shortages, mass migration, declining food yields."

I think you have countered your own argument here.

Because in order to support a carbon tax, I'd have to be convinced that global warming exists ... and if it does, that regulating carbon would actually help alleviate it.

An ETS may require little government involvement, but the lack of an ETS involves ZERO government involvement.

Until we get to the bottom of the ClimateGate scandal, an Emissions Trading Scheme seems about as necessary as a Snake Oil Trading Scheme.

And there's something else I just learned -- the U.S. has decreased its carbon emissions by 12% since 2006 (if memory serves) by simply improving the effectiveness of its energy systems. In other words, it's possible to achieve environmentally friendly results without transnational agencies and international treaties.

But of course, those kinds of solutions don't allow the extortion of billions of dollars from industrialized nations, so they'll never find an audience among the international global warming bureaucracy.

But if this ETS happens, these massively breeding countries will have a green light to accelerate their emissions to the levels per capita of the US.

And there's something else I just learned -- the U.S. has decreased its carbon emissions by 12% since 2006 (if memory serves) by simply improving the effectiveness of its energy systems. In other words, it's possible to achieve environmentally friendly results without transnational agencies and international treaties.

But of course, those kinds of solutions don't allow the extortion of billions of dollars from industrialized nations, so they'll never find an audience among the international global warming bureaucracy.